US securities regulator Financial Industry Regulatory Authority (Finra) has proposed blocking of former stock brokers, securities attorneys and others who served securities firms on some panels arbitrating customer disputes.
According to Finra, the proposed new rule prohibits conditioning settlements of customer disputes on a customer’s agreement not to oppose expungement.
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As per current Finra rules, anyone who served a brokerage for more than five years can be a public arbitrator, while accountants and lawyers who recently performed limited work for a brokerage firm also may qualify as public arbitrators.
Finra chairman and CEO Richard Ketchum said that the regulator will make improvements to the arbitration and expungement process to further enhance investor protections.
"Finra feels strongly that expungement of customer dispute information shouldn’t be bargained for through settlement negotiations or otherwise," Ketchum added.
The rule change is subject to approval by the Securities and Exchange Commission.
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By GlobalData
